Hotel resort fees: Big breakthrough

Published 05-28-2019

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Right now, Booking.com, the nation's largest hotel booking agency, is posting all-up prices from the get-go in its search results pages. The initially posted prices include not only the mandatory resort fee but also local taxes, as well. I've checked for Las Vegas and Honolulu, both hotbeds of the resort fee scam, along with New York City, where the scam has recently appeared.

You've probably encountered this scam, yourself. A hotel wants to net $100 a night for a room. Instead of posting that as the price, however, it says the room costs only $70 a night. And you may well choose that hotel from the list on the basis of the price you see in the initial rate comparison display. But when you dig deeper into the fine print, you notice that there's a mandatory $30 nightly resort fee. So the cost to you is $100, plus whatever local taxes apply. The hotel claims a laundry list of features the fee supposedly covers, but when a fee is mandatory, listing what it supposedly covers is a complete sham -- and, to use the Federal Trade Commission language, a "de facto deception."

The scam started in Las Vegas and Hawaii, two areas where price competition is severe and hotel bean counters believed they needed to catch some sort of edge. It quickly expanded to many major vacation destinations, and more recently to big cities, where many hotels call it a "facility" fee rather than the improbably "resort" appellation. By whatever name, a scam is a scam. And, sadly, there's a Gresham's Law about competitive price advertising: Deceptive pricing drives out honest pricing. Vegas hotels that tried to avoid deception found they couldn't compete with the scammers. That's why some outside force has to fix the situation and congratulations to the marketplace for doing the job.

Booking.com's move is a big win for consumers! Other consumer advocates and I have been working on the FTC and individual states to outlaw this clear violation of truth-in-advertising principles. But FTC, in typical foot-dragging fashion, has done nothing more than send out a letter warning hotels about the practice but containing no hint of enforcement.

In addition to including the deceptive resort or other mandatory fees, Booking.com has gone one better and also included local taxes. You finally see, from the beginning, exactly how much your hotel stay will actually cost. What a concept: "What you see is what you pay." Kudos to Booking.com for doing what government agencies couldn't or wouldn't do: Clean up an obvious industrywide deception.

This move raises the obvious question of whether other big online agencies -- most notably those in the Expedia group -- and metasearch outfits will do. Will they follow, or will they resist? And if nobody else follows, will Booking.com have to back down and revert to deception? Although I haven't had a chance to discuss this with the folks at Booking.com or parent Priceline (I'm currently traveling in Germany), industry mavens suggest the reason for the move is to increase the basis for the commissions it receives. It also may be at least partially due to a forthcoming UK requirement for all-up hotel price displays.

Whatever the reason, Booking.com is doing consumers a very big favor. And until the other big online agencies follow suit, Booking.com should be your go-to source for hotel arrangements. But this unbalanced situation is not likely to last for any length of time. Competition will require that all the big players play the same game. Booking.com is big enough that it might well be able to dictate the way online agencies, in general, display hotel rates. Consumers should obviously hope that's the way it happens.

UPDATE: All-up pricing was working on May 21, but on May 22 it appears not to be working. Something crazy is going on. More later.

Whatever the reason, Booking.com is doing consumers a very big favor. And until the other big online agencies follow suit, Booking.com should be your go-to source for hotel arrangements. But this unbalanced situation is not likely to last for any length of time. Competition will require that all the big players play the same game. Booking.com is big enough that it might well be able to dictate the way online agencies, in general, display hotel rates. Consumers should obviously hope that's the way it happens.

UPDATE: All-up pricing was working on May 21, but on May 22 it appears not to be working. Something crazy is going on. More later.